Over the past few weeks, as the MTA has unveiled its budget projections for the next few years while grappling with ways to fill a hole in its capital budget, debt has become us. State Comptroller Thomas DiNapoli issued a report again warning of the MTA’s debt bomb, and transit advocates have been sounding the alarm with more rigor. This week, the Transport Workers Union Local 100 joined the chorus.
The TWU, which has lend its support to the Occupy Wall Street protests — more on that over the next few days — issued a statement on the MTA’s ledger, and Channel 13’s Metro Focus blog highlighted it yesterday. “The New York City Transit Authority has been in debt to Wall Street for 50 years with no hope of repayment,” Kevin Harrington, acting vice president of Local 100, said. “Wall Street has hurt the transit system with their usurious loans, and a good portion of the Transit Authority’s budget is paying back the interest on these loans without even attacking the principal.”
As Alice Brennan and Alexander Hotz report, the MTA has paid off hundreds of millions in fees. A large group of underwriters have earned close to $40 million dollars by guaranteeing the MTA’s debt, and investment banks have earned substantial fees as well. As long as the state refuses to investment in subway and commuter rail infrastructure improvements and expansion efforts in the New York City area, though, the MTA is left with only Wall Street as a source of money. Yet again, as the TWU notes, the riders are the ones who come out behind.
41 comments
Finally, the TWU is on the MTA’s side in their fight with Albany!
Right??
Wrong! As always, the TWU doesn’t have a clue what is going on. Wall Street’s rates aren’t usurious. The level of fees and interest rates permissible is governed by law. Guess who writes the law: Albany.
Guess who decided to shift the MTA to debt-dependent financing: Albany.
Guess who could change both: Albany.
Guess who has been asleep at the switch: Albany.
Heh, I know. But inadvertently they kind of did fall on the side of the MTA (and against Albany) on this issue.
For once, the TWU is right…
…but they don’t go far enough. Albany being in bed with Wall Street has been and still is a serious, serious problem.
Wondering why taxes just got cut for multi-millionaires, while services got cut for everyone else? Well well well.
“Asleep at the switch” suggests that Albany didn’t know exactly what it was doing when it was forcing the MTA to take on debt it couldn’t pay.
Which may be true, at least outside the Three Men in the Room.
How about the TWU’s role in the MTA’s finacial mess. Every morning I watch empty express buses travel back to brooklyn and Staten island and then again empty back in the afternoon. This is not because there is no space in a manahttan depot to store them. There is. It is due to a contract clause that forces the mta to pollute the air and drive up the operating cost of the express bus service. Each bus travel between 40 and 60 miles unneeded miles each day at a max of 3mpg.
How much money could have been saved by closing tooken booths 15 years ago. How many millions are wasted on two an train crews and various other rider unfreindly contract clause that steals like greedy thugs. What a hipocrite. Unfortunitly no one exposes these shananagans
This has nothing to do with the TWU. Stop blaming everything on the TWU! The MTA is not a seamless homogenous organization. It’s been cobbled together from many different companies. The management changes every several years and it is pulled in all sorts of directions, with false starts and stops, by all sorts of agendas.The express busses were seperate companies (politically connected franchisees) until relatively recently. Even MABSTOA and NYCT are different. There are all sorts of issues– liability, costs, responsibility, managerial baliwicks, bureaucratic inertia– beyond the supposedly nefarious awe inspiring TWU.
Then how come the twu has it in their contract that no more than 10% of buses may be stored in manhattan and they brag about winning the status quo on this issue in their employee newsletters? They also brag in their newsletter about fighting off broad banding. Of cleaner roles that would reduce cost and improve customer experience. A good part of the NRA money issues falls smack in the face of the twu and other mrs unions. But the media gives them a pass. Mta management is awful but the unions through their political donations are socking the taxpaying public
Whose busses? Express busses or city busses or MABSTOA busses? They are different outfits even if they all have MTA decals.
“How many millions are wasted on two an train crews”
What are you trying to argue about here?
I guess this fits the theme of the day, but really, let’s blame Albany, not Wall Street. The choice to finance capital projects with debt rather than taxes was made by politicians.
Financing true capital projects with debt is appropriate. If people will enjoy the benefits for 30 years, then the costs should be spread out over 30 years.
Granted, many of the “projects” here are not real capital projects, and the debt incurred was way too high for the MTA to repay without crippling itself, but the underlying idea of financing capital projects with debt is correct.
And the mta would have been allowed to reduce costs as a result of there investment
The purchaced r-62/68 cars in the 1980’s that allowed for OPTO service but the union refused and paid off politicians lined up behind them.
CCTV was installed to allow the L train to run OPTO 24/7 . That cost us over $20 million since it’s installation
They installed metrocard in 1996 which allowed the closing of hundreds of “rush hour only” tooken booths and other secondary booths which would have significantly reduced the cost of implimentation
How much additional money would have been saved if these station agents were moved to station security roles and enforced the fare.
Hint hint. There would be a lot more money circulating in the economy, and the public pension disaster would be less disastrous, if executive pay was decreased to something like it used to be and dividends as a percent of stock values were increased to something like they used to be.
Unfortunately, the ultimate owners of U.S. companies — people — are prevented from demanding a better deal by two sets of intermediaries. The pension and mutual funds and investment companies who hold their shares. And corporate boards stacked with cronies.
Yep.
CEOs of large companies in the US are now routinely paid over 200 times what their employees are paid.
It used to be 50 times in the 1980s.
And far less than that in the 1950s.
It’s obscene. No CEO is doing the work of 200 men. Well, maybe you could argue that Elon Musk is, but *he doesn’t take a salary*. Like all the real entrepeneurs, he expects to make his money off stock.
Underwriting debt is a very competitive activity, since pretty much anybody with a big enough pile of money can do it. The MTA needs to borrow money. The TWU has money, and lots of it, in pension assets. If the MTA is willing to pay amounts that are usurious and unreasonable, the TWU should be demanding that their pension managers get in on the party by underwriting the next round of MTA bonds.
Their pensions are NYCERS. The TWU only represents NYCTA workers. Why should they underwrite RR boondoggles?
I’m aware the TWU doesn’t manage its pension money directly, but given their strong conviction that banks are getting a great deal in this space, they should be trying to get their pension managers to dive in headfirst. A quick look suggests that the MTA’s largest issue at the moment is a 2039 maturity yielding roughly 5.6%. I’m sure the TWU can convince the teachers and other public workers that they, too, should reap the benefits of such “usurious” rates.
A specious argument, akin to arguing that wealthy people who think that tax rates should be higher should simply donate the difference to the government.
It’s not similar at all, because the paying of taxes and spending the revenue is a collective activity, while collecting great returns on an investment of capital is a fully private benefit. The TWU is saying that these obligations pay not just a good return but an unreasonably, unfairly high return. That’s a very strong buy recommendation, coming from a group with a very big chunk of investable assets. It’s fair to wonder why they wouldn’t jump into that investment – I’d have some questions for anyone who claimed to have identified a strong investment opportunity and yet wasn’t taking advantage of it themselves.
Yes, yes. You’re hightening the contradictions. Anyway, I don’t believe the TWU is statutorially able to make NYCERS do what it wants. If the TWU Local 100 were decertified as the NYCT union the civil servant transit workers would still have their NYCERS pensions. You seem to think they could build casinos if they wanted to.
The pension funds assume they will earn 8.0% per year. If they had more reasonable assumptions, they would find that they were bankrupt.
The interest rate on debt the MTA floated in July was 4.95% according to its own records.
http://www.mta.info/mta/invest.....9_2011.pdf
That is a little high for triple tax free debt, with the federal funds rate at zero. Someone is worried about bankruptcy. Those bonds are transportation revenue bonds (fare backed). Dedicated tax revenue bonds had been floated at less than 3.0% in March.
Hmmmmm!
So the MTA should declare themsleves a bank and borrow money from the Fed at 0.1% interest. Isn’t the system great? I borrow money from the discount window at 0.1% and then lend it to you, with virtually no risk, at 4.95%.
Absolutely. I’ve wanted to be a bank for a while — it’s a license to steal money!
But the system is stacked by making it hard to get and keep a banking charter. If you’re a criminal operation with a long and ancient history, like Goldman Sachs or JP Morgan, why then it’s easy. But if you’re a startup, they make it hard.
it is becasue the mta’s credit score is not that good. Mostly becasue the mta can never take in enough money to truely pay back it’s obligations without a steep fare hike. The state has already taxes everything to death, cell phones, real estate transfer tax, taxi tax, business tax, cable tax and other taxes all over the place. The payroll tax is a tax that if you increase it more you end up getting less over time as companies reduce their operations.
It was foolish to spend the surplus a few years back instead of putting 100% of it towards paying down the debt. Remember the free service days which by the way we still paid the station agents to sit and do nothing.
Cuomo needs to stand up to TWU 100, one of the greediest in the city are standing in the way of nearly $500 million a year in common sense cost savings that are not unfair to it’s workers. None of these savings include health care or pension changes.
It cost the mta a few million dollars a year by allowing workers to pick new jobs a few times a year.
Why can’t idle express bus driver do light cleaning and fueling of their buses or other depot jobs . While these guys sit around a second driver is paid to drive the buses to the fueling line at the depot.
IT’s INSANE.
Not to mention we are paying station cleaners $50+ an hour including benefits for a job that can be filled for $15.
You know, your complaints would be a lot more credible if didn’t make these hyperbolic claims. There may be some station cleaners in the $20 range, and they do have nice benefits, but they aren’t making $50+/hour.
My claims are based on public data. The union published a list of all mta titles and their salaries. Add in NYC published cost of their health and pension packages, divided it by the number of weeks per year and then buy 35 hours a week and you come up with the $50 per hour total compensation number. It is very credible. Then take a ride over to still well ave coney island and sit on a bench for a hour and watch the work of the train cleaners. Platform could be a mess, they won’t lift a finger to clean it even though they are sitting doing nothing when no train is in station. In all fairness there are a handful of cleaners who bust their butt when a train comes, but the majority take their time which results in many train cars getting no cleaning at all. I transfer through there 2-3 times a week
The problem with TWU local 100 is not the pay or benefits. The problem is unwillingness to police members — by protecting slackers, they give themselves all a bad reputation, even the good ones. As you noticed.
At least they finally realized that (i) their fate is tied to the MTA’s fortunes and (ii) are beginning to direct their ire elsewhere. As noted in the above posts though, they need to focus on Albany as well as on a federal level since their the ones that opened the markets to China (at the request of the corporations no doubt), thereby debasing the union movement and favoring the ‘Wal-Martization’ of the work force.
you are clueless.
If the IPAD had to be built in the USA it would cost a minimum of $1200 thus they would sell far less or none at all.
Tens of thousands of apple US based employees would have no job and states and cities would have far less tax revenue.
I love how people blame chine. Many low cost every day items would cost double or more if US made lowering the quiality of life for all. Walmart is the friend of the working class american. It provides affortable items to the masses. It is only vilified becasue the UNION leaders want to collect hundreds of million in potential union dues and nothing else
Wake up to reality. It is the labor unions that hurt the poor in NYC far more than “wall street”. The average rent in $200-$400 higher than it needs to be due to the “union tax” on the nyc economy. Union construction workers paid double the national average. 2% mta transfer tax, taxes that double the electricity costs and nat gas.
It is a crime to pay a broom pusher $70k in benefits and salary
It is the UNION CLASS vs everyone else
thus the poor and working class need rent subsides which further drive up taxes and make it difficult to live here.
You heard of the military industrial complex
In NY we have the socialism version
The union social service progressive complex
– Unions tax thier employees with dues, those dues get funneled to nyc and state politicians who turn there heads as they give large raises and hold the status quo on wasteful work rules. It is a crime we are reducing the quality of life of the average working man
A few city and state workers get overpaid especially if you include the non-cash benefits vs. everyone else that is forced to pay for it.
$30 a hour is fair compensation for a bus driver but we pay $30 cash and another $20 in health and other benfefits I support paying mta employees a fair wage but the work rule should be fair to the public
Next time the TWU tries to paint it’s workers as poor and in need of a big raise to put food in thier mouth think of this
the large majority of TWU NYCT employees make far more than the average pay of the people they serve. I support paying
Real americans never ever see the savings of Chinese made products. If you want to know what the “Chinese” cost of the products is, move the decimal over 1 or 2 places. Your $15 shirt cost 15 cents to make. Minimum wage is 10 cents per hour in China before employer housing and food allowance subtraction (which can be as high as 100% of your wage making you truly a chattel slave).
There is costs of outsourcing to china beyond the cost of labor. You have shipping, customs, and time value cost of predicting the
Not to mention stores have high fixed costs. Americans do see large cost savings by purchasing chin ease made goods. Items such as kitchen materials and knife sets were $80 plus for basic sets in the early 90’s I purchased a nice set of kitchen knives in a block with wood handles for $17 dollars at sears. As china’s middle class rises and wages continue to rise many companies are bringing production of some items back home but we need to reduce tax rates and labor unions need to be realistic on salaries. We can not have another Stella Dora cookie factory incident where the “labor movement” chased away hundreds of jobs because the owner needed to reduce salaries from $23 a hour to $17 to compete plus all the local distributers who lost business .or Boeing incident where oboma is going after Boeing for opening a new factory in south Carolina that is non union. Would they rather them open in china?
You have your facts wrong on the Boeing incident.
Boeing’s executives are on record as moving their factory to South Carolina solely because their employees at their old factory talked about forming a union.
This is known as retaliation, and it’s been illegal since the 1930s. It’s scummy behavior, and it’s illegal. It’s usually hard to prove… but the Boeing officials are *on record* admitting guilt.
You folks really have no idea, do you?
Wall Street gamblers and thieves collect an *average* of $311,000 per year in salary alone (before benefits, before bonuses). That’s the low level people. They collect this for doing… nothing useful whatsoever, and often actively harmful things. For inventing new fees to apply to your debit card. For inventing illegal schemes to evade the real estate transfer tax (look up MERS). For frontrunning customer orders in brokerages (stealing money from customers) using “high frequency trading”. Et cetera.
And those are just the little people. The people at the top of Wall Street collect *millions* per year in money looted from productive companies — all out of the private “banking tax”, the cost you pay for dealing with large banks and brokerages. Except that money ran out, so they are now simply mainlining money from the government via TARP, the Federal Reserve, and numerous other programs.
Bad behavior on the part of the unions (and there is some) *pales* compared to the destructive evils being perpetrated on Wall Street, whose criminal schemes took down the economy in 2008 — and who are carrying out the same schemes again, blithely ignoring the danger to the economy. I’ve been following it for years — try the blog _Naked Capitalism_ (written by an investment manager) if you want to be disgusted.
It should be unconstitutional for any state agency to issue debt on its own, or for any state debt to be issued without express authorization from the legislature (additional approval, such as through a referendum, can also be required but the legislation must go through the normal process at some point), or for taxpayers’ money to be used to guarantee debt, directly or indirectly, except for bonds issued directly by the state and approved by the legislature. But that horse left the barn decades ago.
Otherwise 5% is not too bad for debt backed only by fares, issued by an organization that effectively must operate at a loss, and which can command a government led bailout less than some private firms.
IF you include the tax subsidies and tolls it already collects the mta should not be operating at a loss.
If the mta would be allowed to negotiate fair wages and work rules with their employees, hire qualified managers who properly oversee there employees and be able to make operating decision based on need and not political presure it could easily operate with far less debt. The debt could be payed off based on these revenue.
The contract NYCT has with TWU local 100 is not a fair contract. Work is divided into so many minute roles that you need to hire 3 people to do a job 1 can do. Forced the mta to keep unneeded station agents, conductors and run buses empty on some lines when other were packed(walder fices this a bit)
MTA managers do not properly oversee employees. Take a ride over to stillwell ave CI and watch the cleaners do as litle as possible. I transfer through there daily. That is the tip of the iceburg, depot staff sit around more then they work
Operating decisions should not be made based on political needs but based on real need. The R train operates two man crews on it’s nightly brooklyn shuttle service due to pressure from Marty Golden. Riders could be better served in parts of bath beach by better feeder bus service and express D service rather than costly express buses. It’s not done due to polical pressure
The work rules definitely need to be reformed. Walder had that right.
Good pay for GOOD work, is what I say.
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